FOR IMMEDIATE RELEASE
Matthew Haller, 202-662-0770
Jenna Weisbord, 202-662-0767
WASHINGTON, Jan. 2, 2013 – The International Franchise Association today applauded passage of H.R. 8, the American Taxpayer Relief Act of 2012, a bipartisan agreement to avert the fiscal cliff, prevent tax hikes on thousands of existing and prospective franchises, and make permanent most of the Bush-era tax cuts.
“Averting the fiscal cliff and making current tax rates permanent for franchise business owners and prospective investors is critical to ensuring the positive growth forecast for the franchise industry in 2013 and for consumers across America,” said IFA President & CEO Steve Caldeira. “While not ideal given it raises taxes on some of our most proven job-creating, small business owners who file as individuals, bipartisan solutions are necessary for our leaders in Washington to give confidence to America’s small business community. Failure to act could have jeopardized our industry’s growth plans and pushed the economy back into a recession.”
A report released Dec. 20, 2012, by IFA and IHS Global Insight indicated an agreement to avert the fiscal cliff was necessary for franchise businesses to grow in 2013. According to The Franchise Business Economic Outlook: 2013, franchise businesses will grow at a slightly slower pace in 2013 than in 2012, yet the industry will continue to outpace growth in other business sectors. According to the report, the franchise sector is projected to create 162,000 new jobs and open more than 10,000 new franchise businesses in 2013.
Making the Bush-era tax cuts permanent and extending many business tax extenders included in the bill have been key lobbying priorities for IFA. The bill makes permanent existing income tax rates, capital gains and dividends rates for individual filers earning under $400,000 for singles and $450,000 for joint filers. The income tax rate for those above that threshold rises to 39.6 percent and the capital gains and dividends rate rises to 20 percent. The bill includes a permanent extension of current policy on spousal portability and unification of the estate tax, with a $5 million exemption indexed for inflation and a 40% top rate. Among key tax extenders strongly advocated for by IFA (each extended for one year) in the bill are:
50 percent bonus depreciation for qualifying property purchased and placed in service before January 1, 2014
Extension of 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.
The Work Opportunity Tax Credit for lower-skilled workers and the long-term unemployed.
Section 179 expensing for capital assets such as machinery in the year of purchase.
While Caldeira applauded the bipartisan agreement to avert the fiscal cliff, he said, “This deal is not a substitute for the long-term fundamental fiscal reform our country so urgently needs. When the 113th Congress convenes, our leaders should commit to a long-term plan to address America’s excessive spending, particularly entitlement spending and reducing the unsustainable debt that is choking and holding-back our economic recovery. Any future deal should also include comprehensive tax reform that addresses the complexity of the tax code for both corporations and individuals.”
About the International Franchise Association
The International Franchise Association is the world's oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.